| Organization: | Office of the State Auditor |
|---|---|
| Date published: | August 28, 2024 |
Executive Summary
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Massachusetts Growth Capital Corporation (MGCC) for the period March 1, 2020 through June 30, 2022.
The purpose of our audit was to determine whether MGCC did the following:
- administered the COVID-19 Small Business Relief Grant Program (SBRGP) to ensure that funds were distributed to eligible businesses within eligible industries and that priority was given to businesses serving gateway cities and owned by traditionally underserved groups such as people of color, women, and veterans, in accordance with Section III of Amendment to Attachment A of the Small Business Relief Grant Program—Part II;
- accounted for COVID-19 SBRGP funds received from the Executive Office of Economic Development (formerly the Executive Office of Housing and Economic Development) to ensure that the grant funds MGCC received matched the grant request amounts and were properly recorded to MGCC’s accounting records, in accordance with its Grant Receipts & Control Procedures;
- disbursed the COVID-19 SBRGP funds to eligible businesses to ensure that maximum amounts as stipulated in the contract were distributed to grant recipients and that these funds were used for allowable expenses, in accordance with Section III of Amendment to Attachment A of the Small Business Relief Grant Program—Part II;
- adhered to reporting requirements to ensure that reports contained required information and were submitted according to stipulated timelines, in accordance with Section VII of Amendment to Attachment A of the Small Business Relief Grant Program—Part II; and
- provided information security training to its employees responsible for the management, approval, and accounting of COVID-19 SBRGP funds when initially hired and on an ongoing basis as required by MGCC’s Written Information Security Policy.
Below is a summary of our findings, the effects of those findings, and our recommendations, with links to each page listed.
| Finding 1 | MGCC distributed grants in excess of allowable contract amounts. |
| Effect | Funding some small business grants in excess of amounts allowed by the contract with the Executive Office of Economic Development could result in MGCC and the Commonwealth having less funding available for other state programs and misuse of taxpayer funds. |
| Recommendations |
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| Finding 2 | MGCC did not consistently apply priority scoring for Sector Specific applicants in accordance with its contractual obligations. |
| Effect | If MGCC does not consistently apply priority scoring of applications from businesses that serve gateway cities and businesses owned by people of color, women, and veterans, then applicants that might be entitled to receive grants earlier under the terms of a contract might not receive priority. If the funds are insufficient, then some applicants might not receive a grant at all. |
| Recommendation | MGCC should consistently apply priority scoring in accordance with its contractual obligations to ensure appropriate documentation regarding sector specific grant requirements including, but not limited to, those regarding gateway cities and businesses owned by people of color, women, and veterans. |
| Finding 3 | MGCC provided COVID-19 SBRGP grants to ineligible entities. |
| Effect | As a result, MGCC and the Commonwealth expended money in impermissible ways, which may result in misuse of taxpayer funds and less funding for permissible state programs. |
| Recommendation | MGCC should ensure that it only provides grants to eligible applicants. |
| Finding 4 | MGCC did not provide information security training to its employees responsible for managing and accounting for COVID-19 SBRGP funds. |
| Effect | A lack of such training may lead to user error or compromise the integrity and security of MGCC’s information systems, such as MGCC’s accounting system, which was used to administer approximately $650 million in COVID-19 SBRGP funding. |
| Recommendations |
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| Finding 5 | MGCC did not file COVID-19 SBRGP reports by required dates. |
| Effect | If MGCC does not provide timely grant program and financial information, then key stakeholders and the public cannot measure the impacts of the program and assess whether the program met its intended purpose in a timely manner. |
| Recommendation | MGCC should develop reporting processes and procedures to ensure that required reports are submitted to appropriate entities by required dates and that these reports contain requested information. If dates cannot be met or deadlines are unreasonable given disbursement schedules, MGCC should contact the entity it contracted with to negotiate a different timeframe. |
| Finding 6 | MGCC did not properly reconcile all COVID-19 SBRGP funds that it received. |
| Effect | If MGCC does not reconcile all of its funding, then there is a higher-than-acceptable risk that MGCC cannot identify any potential misappropriation of funds. |
| Recommendations |
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Table of Contents
Appendix
Downloads
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Open PDF file, 928.05 KB, Audit Report - Massachusetts Growth Capital Corporation (English, PDF 928.05 KB)
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